Can Bitcoin Survive In A Deflationary Economy?

[Dulen007]

I have been learning about how central banks usually target 2% inflation for economic growth. Still, Bitcoin has a fixed supply and can even become deflationary over time if people lose access to their wallets.
So I'm interested to know about a few things;

 Can Bitcoin work well in a deflationary environment where the value keeps rising and people prefer to save rather than spend?

Would an economy based on Bitcoin slow down because people won’t want to spend their BTC?

 Or would it encourage smarter spending and long-term thinking instead of constant consumption?

I’m just trying to understand if Bitcoin can really replace fiat money while keeping an economy active, especially since deflation is usually seen as a risk in traditional systems.

[stadus]

I’m just trying to understand if Bitcoin can really replace fiat money while keeping an economy active, especially since deflation is usually seen as a risk in traditional systems.

This probably won’t happen because the government won’t allow it.

However, if inflation gets out of hand especially to the point of hyperinflation in some countries, your safest hedge might be putting money into Bitcoin. It won’t necessarily bring huge profits, but it can help preserve value. Just be realistic with your expectations.

The best way to fight inflation is by growing your money, that means finding ways to earn more so inflation doesn’t catch up to you. One way is to start a business aligned with your passion. Businesses can adjust prices when costs rise, but if you’re just an employee relying on a fixed income, it becomes much harder.

[philipma1957]

I have been learning about how central banks usually target 2% inflation for economic growth. Still, Bitcoin has a fixed supply and can even become deflationary over time if people lose access to their wallets.
So I'm interested to know about a few things;

 Can Bitcoin work well in a deflationary environment where the value keeps rising and people prefer to save rather than spend?

Would an economy based on Bitcoin slow down because people won’t want to spend their BTC?

 Or would it encourage smarter spending and long-term thinking instead of constant consumption?

I’m just trying to understand if Bitcoin can really replace fiat money while keeping an economy active, especially since deflation is usually seen as a risk in traditional systems.

BTC is not the best p2p system

it is not designed for that.


Doge would be better

as doge always prints more coins

but as time goes on the inflation rate approaches zero

doge year 1 1x Total coins
doge year 2 2x total coins  OMG 100% inflation

doge year 10 10x total coins
doge year 11 11x total coins hmm 10% inflation rate


doge year 20 20x total coins
doge year 21 21x total coins even better 5% inflation rate


doge year 50 50x total coins
doge year 51 51x total coins even more better 2% inflation rate

doge year 100 100x total coins
doge year 101 101x total coins only 1% rate of inflation

doge year 1000 1000x total coins
doge year 1001 1001x total coins only 0.1% rate of inflation


so as p2p this is far better than BTC will ever by

BTC is the king of store of value  not king of p2p

now just because the math say this people are crazy and simply may say fuck it and be not rational at all about the simple truth above.

[tsaroz]

I have been learning about how central banks usually target 2% inflation for economic growth. Still, Bitcoin has a fixed supply and can even become deflationary over time if people lose access to their wallets.
So I'm interested to know about a few things;

 Can Bitcoin work well in a deflationary environment where the value keeps rising and people prefer to save rather than spend?

Would an economy based on Bitcoin slow down because people won’t want to spend their BTC?

 Or would it encourage smarter spending and long-term thinking instead of constant consumption?

I’m just trying to understand if Bitcoin can really replace fiat money while keeping an economy active, especially since deflation is usually seen as a risk in traditional systems.

Bitcoin should be considered more like gold than money. When there is uncertainty in economy people would surely turn to gold and bitcoin as they would always have a value regardless of what happens to the state or it's issued money. The world is moving towards a permanent economic slowdown. It's not that people don't want to spend or all they want is to save but it's that there are no good opportunities to invest. The interest rates on deposit are at one of its lowest yet people are keeping their money in the banks rather than investing as they know the market is slowing down.
Bitcoin on the other hand would get rarer, more so than gold and with its solid SHA-256 Hashing and UTXO Model there's no reason for people not to trust its authenticity.

[coupable]

In a deflationary global economy, where we have a stable monetary policy and the Fiat money can keep his real value, I think bitcoin may have more challenges to prove his perfermance as an investment asset and as a store of value as well.
Because of that his major advantage is anti-inflation result of scarcity (just 21 unit), the demand for bitcoin will significantly increase in a stable economic environment. This means that without inflationary pressure that push investors to look for safe havens, the demand for bitcoin as a long term investment asset will definetly decline.

[avikz]

I’m just trying to understand if Bitcoin can really replace fiat money while keeping an economy active, especially since deflation is usually seen as a risk in traditional systems.

No it can't! Bitcoin cannot replace Fiat currency unless the world is a nuclear war and all government establishments are destroyed. A total and I relation of centralised government bodies may allow Bitcoin to be used as a replacement of Fiat. Otherwise it will never happen.

You need to understand that Bitcoin was not created to replace or challenge traditional economy. Also the government will not allow it to happen. So regardless of its value, it will never be used as a primary currency system for any country.

[freedomgo]

Check the global inflation rate from the time Bitcoin was created up to now. If you see that inflation has consistently gone up around the world, then that already answers your question.. Bitcoin didn’t just survive, it thrived. It’s like a classic zero-to-hero story, that’s what Bitcoin is.

[batang_bitcoin]

Can Bitcoin work well in a deflationary environment where the value keeps rising and people prefer to save rather than spend?

Yes, because that's how it is programmed and no matter what people want to do and just save it. There will be ways and reasons that each of us will come to the point of spending and selling it.

Would an economy based on Bitcoin slow down because people won’t want to spend their BTC?

I don't know, not an economist thought but there should be balance.

Or would it encourage smarter spending and long-term thinking instead of constant consumption?

Depends on how the government where this kind of economy is applicable. I guess that if there will be proofs that no one wants to spend their Bitcoins, there will be programs conducted by the government that shall make people spend it.

I’m just trying to understand if Bitcoin can really replace fiat money while keeping an economy active, especially since deflation is usually seen as a risk in traditional systems.

That is what I also believed before but looking to the realization of each economy and countries, it won't be but it's a good alternative so working together with fiat.

[MarjorieZimmermanGinger]

Or would it encourage smarter spending and long-term thinking instead of constant consumption?

I’m just trying to understand if Bitcoin can really replace fiat money while keeping an economy active, especially since deflation is usually seen as a risk in traditional systems.

We can refer to the COVID-19 pandemic and how Bitcoin performed at that time in terms of maintaining its value, although it may have experienced short-term impacts. Regarding losing access to a wallet, is it a mountain of deflationary activity, or is it someone's fault? Bitcoin will function well in any situation, as we can see how far it has come.

But if it replaces fiat entirely, I don't think so, because Bitcoin wasn't created for that purpose. Bitcoin will always be a potential asset, with so much potential to be achieved, making buying Bitcoin much better than saving.

[shinratensei_]

I'm sure even if fiat is deflationary as long as bitcoin still give better gain it will survive.
In deflationary economy what bitcoin needs is just small price growth and with that only, it already put bitcoin as better asset to have than fiat.

[The Cryptovator]

You have asked so many questions. In short answer to your title, yes. Bitcoin could survive in a deflationary economy. Because more than a currency, Bitcoin has become an asset for investment. Whatever the situation of the economy, Bitcoin trading will never stop. The price would dump sometimes for inflation, but the value will be the same or increase more. Worldwide investors are realising the value of Bitcoin; hence, they are storing it.

I’m just trying to understand if Bitcoin can really replace fiat money while keeping an economy active, especially since deflation is usually seen as a risk in traditional systems.

Why do you expect Bitcoin to be replaced with fiat? It would never happen. A decentralised cryptocurrency wouldn't be a global currency but won't replace the fiat. Because fiat is the energy of a country, so they won't destroy it with Bitcoin. Government can't control Bitcoin, and without control the country's economy won't be stable anyway. Rather than a currency, Bitcoin is considered an investment opportunity worldwide. So it doesn't directly influence inflation at all.